Note I - Warranty Costs

Warranty reserves for houses are established to cover estimated costs for materials and labor with regard to warranty-type claims to be incurred subsequent to the closing of a house. Reserves are determined based on historical data and other relevant factors. We may have recourse against subcontractors for claims relating to workmanship and materials. Warranty reserves are included in Accrued and Other Liabilities in the consolidated balance sheets.

During the three months ended March 31, 2013 and 2012, changes in the warranty reserve consisted of the following:

	Three Months
	2013		2012
Accrued warranty reserve, beginning of period	$	549	$	537
Estimated warranty expense		108		163
Amounts charged against warranty reserve		(204)		(99	)
Accrued warranty reserve, end of period	$	453	$	601